How to fix America's financial relationship to healthcare

Yesterday, I posted the Wikipedia page on Direct Primary Care to Hacker News. It got no upvotes, but I submitted it to try to get this information out there:

One of the lesser known provisions of the Patient Protection and Affordable Care Act can be found in Section 1301 (and amendment Section 10104). This provision allows for direct primary care to compete with traditional health insurance options in the mandated Health insurance exchange when combined with a low cost high deductible plan.

I probably cannot find a good article that says what I want it to say and, based on the reactions to the FPP I did on Metafilter the day before, I think I probably need to give some background information anyway.

I worked in insurance for over 5 years. My employer, a major insurance company on the Fortune 500 list, paid for 3 months training for me to even start the job. So I know how insurance is supposed to be used. Some kinds of insurance are good, but, really, the way basic health insurance in the U.S.A. is handled is broken.

In essence, insurance is about risk management. In other words, it is a form of gambling, but a form of gambling intended to hedge your bets or protect you when things go wrong. There are well paid people called actuarials who know a lot more math than I do (and my math background is pretty solid compared to the average person) who crunch the numbers and say "If we sell this policy for this type of risk at this price, we can cover our losses (i.e. payouts on the policies), cover payroll and overhead and still make a profit."

That's great if you are talking something like car insurance because no one is guaranteed to get into a wreck just because they drive and, no matter how carefully you drive, getting on the road puts you at risk of being hit by some other asshole who is drinking or not paying attention or whatever.

The problem here is that basic healthcare is not really something that involves risk. There is no bet being laid here. Everyone needs basic healthcare. So this fundamentally is not something that works to cover as a kind of "bet."

That fact is why, historically, American health insurance companies cancelled policies for people with chronic conditions or denied you access if you had pre-existing condition: Because it isn't a "bet" at that point. It's more like charity -- you pay a few bucks a month and then are guaranteed to get back scads of money in benefits -- and they aren't in the charity business.

The problem with the Affordable Care Act (aka "Obamacare") is that trying to get basic health care to all Americans via private insurance is a fundamentally broken model. It inserts a middle man into the equation, driving up complexity (bureaucracy) and prices for no real gain in the system.

My understanding is that health insurance originated in this country as a means to plump up employee compensation in a situation where paying more wages was not desirable. You could not entice good employees by offering them a pay raise because it bumped them up into another tax bracket and it just wasn't worth it to them. But the way health insurance got handled, if you offered them a benefits package, it increased their quality of life without the punishing extra taxes.

I remarked on that to my youngest son recently and he pointed out that would fit with information in the book Economix about how inflation caused tax bracket creep and caused real wages to shrink.

Direct Primary Care is a trend that is on the rise in this country. As I quoted in my Metafilter FPP:

There are roughly 4,400 direct primary care physicians nationwide, up from 756 in 2010 and a mere 146 in 2005.

From: Direct Primary Care: An Innovative Alternative to Conventional Health Insurance

I am glad to see this. This makes actual sense. It brings down real costs by cutting out the middle man. Bonus: It is sort of a legal loophole under Obamacare. I hope it catches on like wildfire and becomes the standard model in this country.

Edit: In a nutshell, Direct Primary Care is basically a membership in a clinic where you pay a monthly fee in order to get cheap access to your doctor. You basically pay your doctor directly. The monthly fee is substantially less than typical health insurance premiums. This is not "concierge care." This is affordable for people who are not wealthy.


James Jones said…
I'd heard that health insurance as a benefit originated as a workaround for government-imposed wage controls during WWII. Ah, there's a good link:
Thank you! That is helpful information. I will do additional research. I am reasonably confident it was popularized as a means to offer more compensation to mostly well paid white collar workers under circumstances where a benefits package was greater enticement than a higher wage. I will try to firm up my understanding of the exact details.
this all sounds really good. but, if you don't buy an ACA approved insurance plan, you'll get hit with really high fees from the gov at the end of the year. right? or am i missing something.
My understanding is that if you combine it with the right product, no, you should not be fined. You still need a health savings account or HDHP, but this does typically save people money where it is available.
opetke said…
Regarding ACA compliance, I can verify what Michele has said. There are a growing number of ACA compliant products that work synergistically with DPC.
Some examples include:
Individual: Christian Share plans such as Medishare, MCS, or Samaritan.
Small Group: Level funded plans (which are similar to Self funded, but for small businesses). Also MEC programs provide companies with compliance and are a nice fit with DPC.
Large Group: Self funded plans

I am the National Clinic Director for a large network of DPC clinics in the Pac NW. We have our own product lines and work to educate brokers regarding the benefits of Direct Primary Care.
Michele, if you have any questions,please feel free to reach me at I'd enjoy hearing more about what you have learned, and sharing my knowledge with you as well. Thank you for promoting Direct Primary Care, as it is an incredible program and will be the new paradigm of medicine in the future!

Best regards!
Thanks so much for your meaty comment. I will keep your generous offer in mind.

FYI: There are two follow up posts related to this one:
jhon sara said…
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vaiybora said…
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